Posted
by
kdawson
on Wednesday August 27, 2008 @07:05AM
from the not-expanding-here-thanks dept.

JagsLive informs us that the electronics retailer Newegg.com is defying New York lawmakers; it has suddenly stopped collecting sales tax from New York online shoppers. The "Amazon tax," which went into effect June 1, requires online merchants to collect sales tax if they have any affiliates in the state. Amazon is complying but has sued the state on constitutional grounds. Overstock.com dropped all of its New York affiliates and then joined the Amazon lawsuit. Newegg started out complying with the law on June 1, but stopped collecting taxes for New York on August 21. From Newegg's letter to its customers: "After careful review and consideration, we are pleased to inform you that we have stopped collecting New York sales tax, effective August 21, 2008," reads an email the company tossed at customers late last week, including at least one loyal Reg reader. "This decision was driven by your direct and candid feedback and our continued commitment to you as our valued customers."

You should try living in Chicago were we have the highest sales tax in the nation. Try dining out in one of our nice downtown restaurants and you'll get a shock on the taxes when the bill arrives. The cheapest sales tax in city limits in over 10% but when you get downtown or go out to eat you get special extra taxes added.

You should try living in the Netherlands. Income tax averages to about 40% (highest scale is 52%), sales tax is 6% for food and entertainment, 19% for everything else.

I especially love cars here, for those who buy them. You have the manufacturer price. Add about a third in a purchase tax (purpose unknown, except moneygrabbing government). 19% sales tax over that all. Then to keep it, you pay road tax. Gasoline is about US$8.6 per US gallon, 70% of which is tax (I shit you not).

Mine's a company lease car. So the company pays everything to the lease company (who paid that purchase tax over the car, mind you). But because I use it for personal use, I have to pay income tax over 25% of the list price (including all taxes) of the car every year.

I'm sick of the dysfunctional NYS gov't and their high taxes. I work in NYS but a neighboring state is less than fifteen miles from work. When I save enough $$$ to buy a house - at my age which will be the house I retire in - I will NOT be buying in NYS. The neighboring state does not tax retirement income, NYS does. Everything is significantly cheaper there.

NYS has sent their thugs to malls in bordering states to pressure shoppers bearing NYS license plates to shop in NYS. They can take their mafia

When my state got the lottery (back in the 80's), they said the same thing, money for the schools. But as soon as the money came on, they took money from the schools to equal almost no gain in school funding. Sure, they kept the promise that the lottery money would be shoved from the lottery account to the schools accounts but in the end it wasn't more.

As for wetlands and hurricanes, the new building standards in Florida pretty much means a new home or any type of building can survive a hurricane. A problem

Actually, the "lazies" you're talking about are the "Red States", which all get more money back from the Federal government [taxfoundation.org] than they send it in Federal taxes. The "Blue States" like New York pay to prop up those Welfare States by sending more taxes to DC than we get back.

There are a few notable exceptions. New Mexico is the poorest state, with the most tribal population, and lots of large Federal military bases and labs, so its welfare goes mainly to big Federal contractors who don't spread it around the state much. Hawaii is another state with a lot of poor people, many of them tribal, and lots of large Federal military bases. Maine gets a little more than it pays, but again is overall pretty poor. Texas, that "Republican Paradise", is taxed and feeladen every which way, in a giant ripoff, getting just a little less than it pays. Florida is right near the breakeven, but at least it's paying to prop up a system it was #1 in ushering in with its 2000 election. New Hampshire somehow gets screwed, too.

But other than that, the other 44 states all demonstrate that voting Democratic does get you taxed to redistribute your wealth to the rest of the country - even when the redistributors are a Republican controlled Federal government. The list also demonstrates the myth that "the West is independent": other than NM and TX, all those Western states are subsidized by the rest of the country, as they have been since they were colonized.

That list represents the most valuable wealth redistribution programme ever undertaken. Run by Republicans, at the peak of their power. Even as those Republicans cut Federal taxes while running up the Federal expenses, both in record amounts. But evidently spreading the benefits along more or less strict Party lines.

Very puzzling--so if Blue states end up being the losers on this deal why do they want to send even more money to Washington, D.C. Seems to me if I am getting less than what I am sending, I should send less.
Something is missing here -- not sure what, though.

Actually, it makes a lot of sense. Blue states are the ones with residents who desperately want taxes to go up, and go up they do. In red states, they avoid passing state tax laws. The citizens campaign for lawmakers who will return taxes to the people. They probably itemize much more carefully to avoid sending even a dime more to the federal government than it is owed. They are quick to support and take any economic stimulus packages the government will hand out, because that means more money to the people

And the money that "goes for the war in Iraq" mostly goes back to the people (sadly, little of it actually goes to salaries of military personal). Military bases are a huge source of local employment, as are the research facilities, as are the factories where most of that milspec stuff gets built. The much vilified Haliburton, for example, hasn't been paying huge dividends (even if it were, shareholder are people too) as they've been paying (mostly) American citizens a lot of money to provide services in

Bit a difference between individuals doing it and a state government taking exception to the fact that it's citizens are effectively subsidizing other parts of the country.

In the case of New York it's particularly outrageous. We get back around 80 cents on the dollar in Federal services/money. It's espically infuriating when you talk about Homeland Security funding. We have a lot of juicy targets in this state and suffered the most on 9/11 yet Wyoming gets more funding per capita than we do. WTF is wron

Uh, according to you own link, there are several states in the West that pay more than they receive. California ($0.78), Washington ($0.88), Oregon ($0.93). In fact, California subsidizes at a higher rate than New York ($0.79). So, yeah, we are pretty independent.

"Maine gets a little more than it pays"

Maine gets a shitload more than it pays ($1.41). Do you even read your own link before you post?

Red States, not just "Western States", are the Welfare States, as I clearly state in my post, as is clearly supported by the data. California is a Blue State. So of course it's paying to carry the Red States (that attack it for the fraudulent opposite), just like I said.

You've really got a lot of nerve pretending you can tell me about reading comprehension, when you got that basic premise of this discussion so basically wrong.

And though Maine receives the welfare at a substantially higher rate than it it pa

Your point is, in case you haven't realized it yet, that taxes based on income -- especially tiered brackets based on income -- are inherently unfair when levied equally against people in areas of entirely divergent costs of living.

When the average income in NY state is much higher than the average income in Montana, but only because the cost of living in NY State is equally higher, then the collection of a higher percentage of a New Yorker's income is inherently unfair.

The minimum deductions and itemized deductions mitigate this somewhat, but not to the point it's equal to a flat percentage tax. The minimum deduction actually favors the one with the lower income, even in areas where the lower income offers a better standard of living.

A flat tax would solve many of these issues. However, it would not solve the simple fact that roads and bridges which serve the entire country, especially the highly populated areas, run through lower populated areas. These roads need to be safe and effective in Missouri and Iowa as much as in California and New York. They are more heavily trafficked per the population in Missouri because of interstate trucking, but the goods mostly pass through to people in other states. The whole country helps pay for those roads because the whole country uses them, even if indirectly.

Federal taxes probably shouldn't pay for direct welfare distributions. The states should be required to do something about it that pleases a very small Federal oversight agency. That way, less money that's not paying for things the whole country uses would be paid for by the whole country.

Actually, the "lazies" you're talking about are the "Red States", which all get more money back from the Federal government [taxfoundation.org] than they send it in Federal taxes. The "Blue States" like New York pay to prop up those Welfare States by sending more taxes to DC than we get back.

Well, there's a textbook logical fallacy for ya. Just like those nationwide red/blue election maps that make it look like 90% of the country voted for Bush.

Big cities pay more taxes because they have more people, and big cities tend to vote Democrat. Those two data points aren't necessarily related, and without showing that they are, your entire argument falls apart. Come back when you have some "laziness per capita" figures.

Wow, you are a perfect example of how Republicans shortchanging education makes Republicans who can't think.

I think there's some irony to be found in there, considering a person's current political alignment can't retroactively affect a change on their education. I'm sure this guy had exactly the same education that plenty of 'Democrats' (or whatever alignment you consider yourself) had.

Don't mind me, I just get fed up seeing people spout off 'republican this', 'democrat that' as if they are spitting out abominable insults. It would be funny, if there wasn't so much hate or ego involved. Reminds me of that Dr Seu

Although it was poorly put, he does have a point. Cities naturally operate more efficiently, so while each citizen can afford to pay more taxes, they don't need as much taxes to operate. Some things the federal government pays for, like the highway system, are more keyed to land area than population. Places that are more sparsely populated will most likely get more money than they give.

Likewise, the Red/Blue State probability is linked to population density: people starting families tend to move to places of low population density, and they are highly correlated with voting Republican [nytimes.com].

Now, is it a good thing that some states are supporting others? Ideally, every state would be equally efficient, but realistically they are not; no one is going to build a Manhattan in the Rockies. But could the more efficient states still benefit from subsidizing the less efficient ones? Ostensibly yes. For example: Minnesota and Washington both "pull their weight", but none of the states connecting them do. Still, the two benefit from having federally funded rail lines and highways between them, along with police, an educated populace, a number of national parks, etc.

There are some things about cities that are inefficient, and some things that are efficient.

It's more efficient to operate light rail in a city, obviously. You need enough people close enough to the tracks and stations to make it worthwhile.

It's less efficient to drive a car. When I say "20 minutes by car", I might mean 15 or 20 miles in downstate Illinois or 3 to 5 miles in Chicago. I know people who work from 5 or 6 am to 2 or 3 pm instead of 8 to 5

Could someone explain, isn't it required by (most) states' laws that individuals pay sales tax on goods purchased? I mean, people like "neglecting" to pay it, because it's easy to avoid, but ideally doesn't the New York law just shift the burden from the taxpayer at tax time to the retailer at time of purchase?

I guess what I'm asking is: is this whole problem arising from the retailers' desire not to be burdened with the logistics of collecting tax, and the consumers' desire to evade the tax? Or is there something else I'm missing here?

You don't have to pay sales tax in your state on goods purchased in another state. The whole problem with internet companies is deciding what "state" they are in.

The argument Amazon et. al make is that under the US constitution the federal government has sole jurisdiction to regulate interstate commerce - and New York imposing a sales tax on goods purchased in another state would run contrary to that.

The arguments in court certainly are going to surround in what "state" Amazon.com is operating in.

"You don't have to pay sales tax in your state on goods purchased in another state. The whole problem with internet companies is deciding what "state" they are in."

Yes you do, albeit indirectly. You have to pay a "use tax [wikipedia.org]" on anything purchased outside of your tax jurisdiction which you then bring in for use or consumption. This is a whole branch of our tax code that doesn't cope well with the modern, internetworked world.

An outside observer might wonder why this is such a big deal since the tax is going to be paid as use tax rather than sales tax. The difference here is that sales tax is charge at the point of sale while the use tax is charged on state tax returns.

Use tax is notoriously hard to enforce because the state necessarily doesn't know about any items you bought in a different state. Many people lie about their use tax liability on their state tax returns because the state usually doesn't have any evidence to the contrary.

Use tax is also not well enforced because use tax can be deducted on tax forms, so what you don't report in use tax doesn't increase your tax return. In a sense, you're paying use tax indirectly by not reporting your purchases. Although, this isn't the case when you itemize your deductions and report deductions on goods purchased out of state.

Use tax is also not well enforced because use tax can be deducted on tax forms, so what you don't report in use tax doesn't increase your tax return. In a sense, you're paying use tax indirectly by not reporting your purchases.

Well, wait, aren't "deductions" deducted from your income, not from your income tax? I don't get how reporting use tax saves you money...

Reporting: you pay use tax, use tax is deducted from your income, your income tax goes down by a small fraction of the amount you paid in use tax (unless you know how to work the system - in which case a deduction could put your income numbers into a more comfortable bracket or something...)

So it seems like you don't come out ahead by reporting, you actually lose money...

You come out ahead until you get caught, in which case you're looking at having to pay the tax, interest and penalties on pain of tax evasion charges. If you get caught a second time (i.e. after you've been cited for a previous "underpayment") or the tax in question is large enough, your state's tax authorities might decide to press criminal tax evasion charges right from the get-go.

Don't think you you're going to get caught? That's about to change as a result of the recent passed housing bill [slashdot.org]. This bill contained a provision to report nearly all online merchants' credit card transactions to the IRS; it's pretty hard to survive as an online business if you're not making more than 200 credit card sales a year or grossing $10,000 in credit card transations. Since the vast majority of Congress represents states that have a sales tax, if this data isn't already being shared with the state governments, expect it to happen in a bill in the next congressional session.

Five years from now, it's going to be very easy for states to find out their residents' out-of-state transactions, confirm the shipping address is within the state, and bill people for unpaid use taxes. If you hate the idea of paying sales and use taxes that much, you can move to one of the handful of states that doesn't have a sales tax. Otherwise, while it's been nice to catch a break from easy enforcement for the past 10 years, it's time to realize that buying online "tax free" in most states is basically tax evasion and that eventually Mr. Taxman will be looking for his cut.

That depends on which use tax you are referring to. If you buy a car outside of NYS you won't be able to register it and get license plates until you either pay the NYS sales/use tax or provide proof that you had to pay sales/use tax to the state in which you bought it.

The use tax that's hard to enforce is the tax that NYS attempts to assess on out of state/online consumer purchases, like books, DVDs, etc, etc. You are supposed to pay this tax on your NYS income tax return.... but most people (myself incl

Right.. but the Use tax applies to citizens within a state buy something from out of state. Of course I don't understand how that survived any Interstate commerce challenges. It seems to be that while indirect, it's still affecting Interstate commerce.

It doesn't even cope well with the paved world. If you buy a box of matches in Ontario County, NY, use half of the matches, drive to your home in Monroe County, NY, and then use the other half, you have to pay the difference between Monroe County tax and Ontario County tax on half the purchase price of the box of matches. Somehow you should get the tax difference on half the purchase price back if you do it the other way around, but good luck with that.

Just a way to make sure that they can arrest any citizen in the country on tax evasion charges any time they want.

"This is a whole branch of our tax code that doesn't cope well with the modern, internetworked world."

Modern? Ever heard of a Sears, Montgomery Ward, or Best Catalog? Buying goods from an out of state vendor predates the modern income tax system and even the IRS in this country. Heck, buying from catalog predates indoor plumbing in a lot of places. The Sears catalog was commonly used as toilet paper in outhouses. This was a big deal back then when it was hard to enforce use taxes but now that the technology exists to squeeze more money from the taxpayer, governments are jumping at the opportunity.

purchases via "casual sales" by individuals not in the ordinary course of business." Does this mean for personal purchases the use tax does not apply, or am I misinterpreting this?

I think that that clause only applies if the seller is not in the business of selling that item. If I buy a case of pickled herring for my own use, and sell you four cans (because I don't intend to live long enough to finish-off a case of pickled herring), then I am a 'casual' seller who does not have to collect sales tax.

NewEgg put the onus on the NY taxpayer.
On a NYS Income tax return form you're supposed to report the amount of any items you bought out of NYS which you didn't pay sales tax on. And you're supposed to then add the sales tax based on that line. Dont yell at me, just letting you know that its the NYS taxpayers responsibility.

It seems to me that Conservatism also costs money [nationalpriorities.org].....

And before you go and whine that Bush and the GOP aren't real "Conservatives" that's what they are passing themselves off as and they are getting the lions share of the support from people who fashion themselves as Conservatives. Where were the Conservatives when Ron Paul needed the support during the primaries?

People here are missing the point. The sales tax does not tax an interstate transaction; it taxes a sale from a seller in a state to a buyer in the same state. Whether the warehouse from which the item is shipped is in another state doesn't matter, what matters is whether the seller does business in ("has nexus") in the state in which the buyer took delivery.

The states have different ways of determining whether a seller has nexus. Generally, these involve operating a facility or having employees in that state.

What New York did was to extend the definition to include the affiliates of the seller in the definition. This is not on its face silly, since the affiliates operate in much the same way as a store would.

Therefore, what will be before the court will not be the constitutionality of the sales tax, but the more limited issue of this extension of the definition of nexus.

This is a way to close a loophole the online retailers are using to give themselves a leg up over brick and mortar stores.

It doesn't matter how they feel. New York State can't tax a purchase made in Texas (or wherever Amazon is located) any more than they can tax a purchase made in Mongolia. Moreover, they can't impose taxes on New York citizens importing goods from other states, because the Constitution and its commerce clause forbid that.

You may feel the commerce clause forbids use taxes, but they're on the books in damn near every state, and it'd be up to you to spend years in court fighting your state revenue service to prove it's unconstitutional.

No it isn't the same. New York claims to tax Amazon purchases even though Amazon has no physical presence in New York precisely because Amazon has an affiliate program; if a New York resident is an affiliate, they claim sales tax on purchases made via that affiliate. It's a new wrinkle on things, but it isn't nearly as bizarre or blatantly illegal as most people suggest.

The commerce clause certainly prevents a state from imposing tariffs on imports from other states. However, the use tax is not a tariff. It is a tax it imposes on its own citizens based on what they will do with the item, not those conducting the commerce.

For instance, in my state, items brought into the state for personal use are generally taxed at the same rate as items bought in state if they are brought into the state within 6 months of purchase. Items brought in for resale are not taxed.

Your employer pays its taxes. Then they pay their share of your taxes. Then you pay your share of your taxes. Then repeat all three steps for the state.

Then, you spend your income. You get taxed on the purchase. You then get taxed to keep several of the items you buy in many states (home, car, etc).Then you pay taxes to use your phone, even though your tax dollars helped pay for the infrastructure for the phone company in the first place. You pay a tax on your car's fuel, to register it, on top of the insurance premium you're required to have for it, and on any parts and labor to maintain it.

If you buy an investment and it actually does return money, you get taxed on that even though the company that issued the bond or stock pays revenue and profit taxes or that you're paying property taxes on real estate investmenats.

This really only scratches the surface. If everything was a simple, one-step tax, people would be horrified at the amount they pay.

It is required, in theory, but the Interstate Commerce clause of the Constitution prevents them from collecting tax on any sales across state boundaries.

They still try to do so, generally under the guise of a "use tax" that's conveniently only applied to purchases from out-of-state, but as far as I'm aware such unequal taxes have never been tested in court. IANAL, of course.

They have been, at least in the pre-web era. I don't recall the specific name of the case but the upshot of the decision was that as long as the use-tax wasn't discriminatory toward out-of-state purchases (i.e. as long as it closely mirrored the sales tax), it was ok.

Now the real question is what Constitutional grounds does the state of NY have to enforce *Newegg's* collection of this use tax. Is the State of NY going to sue Newegg in Delaware court? This could get quite complicated...

Basically states claim that if a retailer has a physical presence in the state they must collect sales tax. If they do not have a physical presence they do (or did not) have to collect the tax although technically the individual doing the purchasing was supposed to have sent the tax themselves to their own state. That's called "use tax" and is starting to become something more states are getting picky about collecting.
Here's a longer explanation:
http://articles.bplans.com/index.php/business-articles/running-an-online-business/tax-on-internet-sales/ [bplans.com]

There has never been a Congress that met a tax it didn't like. Check out the history of the income tax in the US. It was imposed twice and struck down on Constitutional grounds before the 16th Amendment was ratified.

No, that's exactly it. It save newegg the effort, and also increases their business from customers who intend to avoid paying the tax themselves.

It will even increase business from customers who DO intend to pay what they owe for 2 reasons:

1) Something you will owe later doesn't FEEL as costly to many people as something you have to pay now.

2) Many states (I'm not a new yorker, so I don't know if this applies to them) understand the difficulty in tracking your sales, and offer a flat tax option. If you intend to pay this way, then it's sort of like an all you can eat buffet. Once you've paid the flat rate, it's in your best interest to find as many retailers as you can that don't collect tax.

Nobody is missing anything...well, except you. You've completely missed why this whole thing came about. The state of New York has asserted that having affiliates located in the state constitutes a business presence in the state. That's what Amazon's lawsuit is about.

You make it sound like the state is blatantly and intentionally violating the law, when the fact of the matter is there is a dispute over the law and that needs to be clarified in court. Until it is clarified, each company can choose how it wan

If consumers, for that matter income earners, had a true understanding of their tax load they would be up in arms. It is one thing to ask for this, that, and the other thing, from your government when you don't know the cost.

So governments do what they do best, they hide the tax. What is the number way to hide the real tax from the taxpayer? Embed it. This means hide it in the cost of goods and services. Lets use an oil company like Exxon for fun, after all its accused of having WINFALL profits. In 2006, Exxon's EBT (earnings before tax) was $67.4 billion, it paid $27.9 billion in taxes (41.4% tax rate), and its NIAT (net income after tax), or profit, was $39.5 billion. So, where does that 27.9 BILLION dollars come from. The taxpayer. Exxon merely wrote the check for all the dollars it collected from you and me to pay it.

The politicians win on every front here, they can hide the true cost of the tax load on the American worker and vilify any corporation that makes big numbers as being against the poor, downtrodden, hungry, or my favorite "children".

Ignorance and envy are the two greatest weapons the politicians employ and from watching the current elections it really pays off

But you're missing the point: Exxon will be collecting $67.4 billion from you and me, *irrespective* of whether they are taxed at 40% or 4%. In fact, the tax represents money coming *back* to the people, and not a tax *on* the people. Lower the taxes on Exxon, and there will be less tax revenue with which to fund public profits.

Wow, I'm really hoping you aren't an Economics teacher. No wonder things are getting bad here with this kind of thinking.

Repeat after me, ALL taxes come from the consumer. There is no such thing as a "corporate" tax. They just apply whatever taxes they have to pay to the cost of their goods.

All corporate taxes do is increase the costs of the goods these corporations produce. Well, that and has them leaving the USA to avoid the punitive taxes applied to them. Anyone want a Miller High Life(Corpora

Repeat after me, ALL taxes come from the consumer. There is no such thing as a "corporate" tax. They just apply whatever taxes they have to pay to the cost of their goods.

In response to a tax, a corporation can raise its prices, it can cut its dividends, or it can slow its investment in expansion. In a functioning market, the corporations that raises prices will lose business and the ones that cut its dividends or expansion will gain business.

You are wrong, if the market is functioning, the business is already operating at the lowest amount of profit that is sustainable. In a properly functioning market, if the government increases the business' taxes, the business must raise prices or go out of business.
If a business can absorb an increase in corporate taxes without increasing what it charges consumers it is evidence of an inefficient market.

FFS. I covered this. Gas is something that most people need. Not want, need. There are few enough oil companies that they can keep prices high and not worry about being out-priced by a competitor, and people will pay for it because they have to.

You have a point if you were looking at the United States in a vacuum. Globally however there are a bit more than a "few" oil companies and pump prices (with the exception of states that subsidize the costs for their citizens) are going up across the World. This isn't a uniquely American problem.

China is putting millions of new vehicles on the road each year. Ditto for India. Meanwhile oil production is falling pretty much everywhere. Is it really that hard of a concept to grasp that oil is a global commodity that is currently facing increased demand at a time when production is leveling off/dropping? This is economics 101 -- you don't have to be Adam Smith to understand it.

If they couldn't just charge what they wanted, the prices wouldn't be even as high as they are now, let alone what they were a couple of months ago

What are you basing this on other than your gut feeling? Congress has investigated the oil companies multiple times for price gouging. They've come up empty every single time. Do you really think that there isn't some ambitious politician that would love to make an issue out of this if he/she could prove they were fixing prices?

Where do you think Exxon gets their oil from? Do you think it's free to obtain? They have a pay the Saudis/Canadians/Mexicans/Venezuelans/Russians/etc market rates to obtain that crude. If they refuse to pay market rates then the producers will just sell it to someone who will -- the Europeans, Chinese or Indians. Even American crude operates under this same basic principle -- why would Exxon sell crude oil under it's direct control below market rates?

The only real solution to this problem is to change the energy paradigm or produce more oil. I prefer the former option given the environmental impact of carbon based fuel but even I'm enough of a realist to know that the switchover isn't going to happen overnight. Do you think the existing transportation infrastructure was built overnight? Tens of thousands of service stations? Hundreds of millions of cars? The mechanics that work on those cars? The dealers that sell them?

What should be done is either some regulation

What do you want to regulate? Honestly.... what would you regulate that would bring prices down? I'm not opposed to all regulation but in this instance I really don't think it's going to help us much. Moreover I'm not convinced that the current price of oil is a bad thing, given that it's finally resulting in people changing their consumption habits.

or trying to get some competition going

Where is that competition going to obtain it's oil from? Do you think there is some surplus of available oil on the market that American oil companies aren't taking advantage of?

And comparing oil companies to telecom doesn't help your argument at all

I wasn't comparing them. Just pointing out the absurdity of targeting the oil industry for it's "excessive" profits.

"I know, there are evil rich people who pay 35% and you pay 28% but its not fair they still have more dollars. What has this country come to if we are so filled with spite and envy that we begrudge anyone doing better than us or set limits on how well any one person is allowed to do?"

I guess you're right. I'd be happy to get back to the good old days of the USA, when "the greatest generation" had a top tax bracket of 70%-94% all the way from 1936 to 1981.

You missed one more area of where the Government gets *their* windfall profits. Sure, Exxon paid $27.9 billion in taxes on the profit they made from $0.09/gal, but they were already collecting on each gallon of gas we buy.

Also without a tax, they'd be able to sell more and gas prices would be cheaper.

Buh? Have you never heard of supply and demand? If taxes were lower, demand would go up, and world prices (as in, the cost of a barrel of crude oil) would go up, not down (though the net change may be zero, it's hard to say). Why do you think oil prices dropped a bit after a number of nations announced they were thinking of cutting oil subsidies? Answer: reduced demand projections.

Yes, but when you purchase something from out of state, the normally-unintelligible
mess of tax laws become even more convoluted.

Many states have a "use" tax, which applies to items purchased from out-of-state
by state residents. The burden of paying it rests on the individual, however, not
the merchant (and very, very few people actually pay it except on items they
can't avoid reporting, such as cars and boats).

The real issue here involves what constitutes a "presence" in a given state, as well
as where the transaction actually occurs. Most states would like to claim the
transaction occurs at the location of the buyer, but so far the federal government hasn't
let them get away with that. More commonly, states limit their attempts to collect to
vendors who have some physical presence in that state - Meaning they have some power
to make life miserable for noncomplying vendors.

So then the question changes to "what constitutes a physical presence?". The largest
online merchants such as Amazon have warehouses all over the country, but don't ever
actually sell anything on-site, they just ship from there. So does that count as a
retail presence, or not?

So then the question changes to "what constitutes a physical presence?". The largest online merchants such as Amazon have warehouses all over the country, but don't ever actually sell anything on-site, they just ship from there. So does that count as a retail presence, or not?

And just to make things more difficult, the NY law in question isn't even talking about warehouses. It's talking about affiliates. NewEgg is located in California, but they have an affiliate program. I'm an affiliate of theirs and I live in NY. Does that make NewEgg have a physical location in New York state? Of course not. I'm not an employee of NewEgg, I'm just an affiliate. I post a link to NewEgg on my website and get a small kickback for any sales that it generates. The website that I run is hosted by a company in Texas. Does that mean that NewEgg has a "physical presence" in Texas also and should pay Texas sales tax? The whole "affiliate = physical presence" argument is just a money grab. Then again, we shouldn't be surprised. This is the state that also taxes telecommuters on their full income even if they only work inside NY for a short period of time. (See the story of Scott Smallwood: http://www.nytimes.com/2008/02/20/business/businessspecial2/20tax.html [nytimes.com] )

Whats interesting is the computer store I used to work for has a NYS tax ID number and can collect NY state sales tax. Even though they have no physical offices in NY they apparently ran into problems when selling at computer shows in NY. They later stopped selling at computer shows because PA companies would show up at the NJ shows and undercut them in price.... because they weren't charging any sales tax. It was technically illegal, but NJ unlike NY turned their head the other way to the practice.

Anyone can make any argument that they wish to, but the fact that the State of New York takes a position that is spurious and tries to enforce it to gain revenue does not make it any less unconstitutional. US legal history is replete with instances where states have made other Constitution-trampling pronouncements, only to be smacked down by one court or another.

I'm not so sure it's that spurious. Here's the issue - remove this from the online world for a moment. Let's say I have a regular business and

Interesting to see that part of the article summary is a direct copy and paste from theregister.co.uk and not a link back to the original article? [channelregister.co.uk]

"After careful review and consideration, we are pleased to inform you that we have stopped collecting New York sales tax, effective August 21, 2008," reads an email the company tossed at customers late last week, including at least one loyal Reg reader. "This decision was driven by your direct and candid feedback and our continued commitment to you as our valued customers."

New York estimates that the provision will generate $50 million in revenue for the state in the fiscal year.Tax experts look to other cash-strapped states to adopt similar measures if the New York law holds up in court.

Boy, I wish I could raise $50 million without providing any additional benefits to anyone. Is there anyway to donate to Amazon/Newegg's legal defense team? : )

"This decision was driven by your direct and candid feedback and our continued commitment to you as our valued customers."

This is obviously just a publicity statement. There is no way in the world a large corporation would assume the massive risk of defying a law like this on the advice of its customers. Something else precipitated this.

Most likely, the law department in the company examined the law, and then the risk management division (or whoever it is: I have no idea how Newegg is managed) decided that the risk was worth taking. PR, seeing an opportunity for, well, PR, made up a fluff statement about how the dear customers were the reason.

Here is the deal:- If you don't pay them, your state can send you nasty grams in the mail saying "We see you have filed zero dollars in use taxes, please pay them." These notices are fairly common. IOW, the state tax departments are saying "Look, we aren't stupid, you're buying stuff on line, pay your tax". Now who here wants to keep records of the crap they buy JUST so you can pay use tax at the end of the year?- With a mandated sales tax, it means YOU don't have to keep records for paying end-of-year taxes. They just add it on to your purchase like any other state(if your state has a sales tax). I don't know about you but I'd much rather pay the friggin tax up front then worry about the stupid EOY paperwork.

One thing to make life easier for consumers AND businesses: only allow one tax rate per state. example: Wisconsin has a moronic tax system where every county can charge differing rates something up to like 1/2% on top of whatever the state charges. Some counties are 5%, some are 5.5%, or like 5.25%. So to make it easier on on-line retailers, just legislate single tax rates per state for those that have a sales tax. End this moronic madness now.

With a mandated sales tax, it means YOU don't have to keep records for
paying end-of-year taxes.

No, it means we can't ignore use taxes as an unconstitutional violation
of interstate commerce. Pay if you want, but few do - And suggesting
we make it "painless" by having the merchants handle the tax completely
misses (and actually hides) the point that we shouldn't pay such taxes
in the first place.

End this moronic madness now

And there, we agree (in word if not in spirit) - Let's entirely do away with
the single most regressive taxes we have. Personally, I think we should
also do away with "withholding" as well, and make everyone actually cough up
$10-30k every April 15th - Watch how fast we get serious tax reform when
people realize how much they actually pay, rather than merely bitching about
it as a mostly-meaningless "rate" they don't really feel thanks to the government
slowly boiling the frog.

Also note that some states have a minimum purchase amount before you need to worry about paying use taxes (not that any of you worry). For instance in DC, you only need to pay use taxes if you purchased more than $400 worth of items from catalogs or online in the previous year.

Towns in AR are incorporated around county land. The town has 1% added to already 5% making 6% - FOR THE TOWN LAND. Post Office makes these two lands appear as 1 so the only choice is charging the 6% for the county land. Military Bases and Parks also fall into these traps.

Washington state has MTA the follow the boundaries elementary school districts. Again you do not know for a given address if it is in or out school district.

Mobile AL has MTA so EVERY postal code two rates.

Texas has multiple rates that can add up to 3% over the state rate, but they are added in order so that if the full rate can be used (ie going over 3% total) then it skipped and you add the next rate.

Memphis Area has sales tax rate ONLY for the first $2500 then it drops to 0.

In most states Sales Tax is charged at the point of consumption (ie Where is the Cash Register). But that can also mean "Where is the customer's mailbox" since the goods are being delievered to customer, no consumption occurred until delivery. Texas just changed theirs back to be where the business is located, to help delivery companies (like flower) from having to figure out all the local tax rates.

Even the large tax rate companies are not being of help. They need a system that does Address Correction and Tax Rate following geo-boundaries.

YOU ARE SUPPOSED TO BE PAYING TAXES ON ON-LINE PURCHASES. THEY'RE CALLED USE TAXES.

THERE ARE NOT SUPPOSED TO BE ANY STATE TAXES ON INTERSTATE COMMERCE. IT IS CALLED THE CONSTITUTION.

Yes, I know the claim is that use taxes aren't on interstate commerce. They're supposed to be on the "use" of an item within a state by one of its residents. But given the the deduction (or, sometimes, exemption) for goods on which other state sales taxes have been paid, this is nothing but a fig leaf for most goods.

This measure was supposed to boost local businesses and lower unemployment. Do you think if Amazon and NewEgg drop theirs, the $50m in revenue will be paid out in unemployment?

I am disgusted by the government of my state. I moved from PA to NY for a better job, but literally everything is higher taxed and more expensive. The taxes don't make any sense either. I live near Rochester, NY. Depending on the locality you're in, you can pay 6% (Henrietta) to 10% (Greece) taxes on a variety of things but if you send a letter it's all Rochester, NY. And then there is the paper store, I mean government agencies. Everything needs a permit, paper, registration or a tax. You can't get a single piece of paper without paying at least $10 for it.

How ironic it is, that, we hear a bunch of liberals bitching about those terrible people on Wall Street, in New York, and it turns out those terrible people on Wall Street took such a beating that the state is looking at a nearly billion dollar tax short fall. Thus, in New York we learn the ultimately failing of progressive taxation, just as we have learned nationally. If the rich do not make any money, the government is screwed.

I'm sick of hearing everyone try and talk about increasing taxes as "providing revenue". It's an insult to compare the activities of government to the activities of the private sector. Government is basically a collection of pie in the sky power mongers that use the power of the gun, cops directed by the legislature, to impose their financial will on people. By contrast, all a private company do is offer a good or a service in return, and thus they are compelled to offer something back.

New York, in particular, is disgusting. They have a tax policy that reflects decades of liberal orthodoxy and the stupidity of the results just staggers the mind. I mean, they raise taxes on cigarettes, and are suddenly horrified to find that people do not buy cigarettes in New York. Now, what do you think the enlightened liberals do up there? Do you think they set the tax at a more reasonable level? No... they call out the cops and pass even -more- laws designed to try and ban people from cigarettes from out of state.

Now, of course, they reach out and are suing, again, with the barrel of the legislative gun, trying to sue someone outside of the state, like a crab or a cancer spreading and grasping desperately for any piece of loot that it can steal.... and they call this revenue.

I do not think that word means what you think it means. In the context of taxes, it's not a meaningless epithet; the sales tax is not progressive, it is flat

Actually the sales tax is regressive.. but that's another story. I was really thinking more about how income taxes tend to be shifted to the rich. What happens now is that, because the taxes are stacked so much on the wealthy, the revenue stream for the government is wildly unstable.

The thing is, about Republican politics, is that, they haven't honestly told the whole story about how taxation is supposed to work. Really, to get the lowest overall rate, everyone has to pay -some- taxes. But what's happened over the years is that this has been translated into the idea of tax cuts and for the wealthy to get tax cuts, thus, the middle class has to get them, and right now, poor people aren't paying any taxes at all.

If you really wanted to maximize both the size and the stability of the tax stream against all other goals - in other words, without being "nice about it", you should probably have a federal sales tax to tax the poor and criminal classes and enough of one to also be an effective tax increase on the middle class, and then lower the tax rates on the rich so that effectively, everyone is paying the same overall rate. That minimizes the risk to the tax collection portfolio.. oh christ, there I go using that "revenue" term that i just flamed about, by spreading it to the most people.

Then, if taxes are too high for people, then you cut them, but you also have to decide what out of government you don't want. Realistically, at the federal level, this is going to mean BOTH a capping of the entitlements AND a cut to the size of the defense budget.

In the face of that, when you look at the candidates, you can see that both are pretty much retarded. Obama wants to raise taxes on the rich and then tease with a middle class tax cut and take the poor off the roles altogether, completely destabalizing the payment stream. McCain wants to lock in Bush's taxes, which is ok, but he also needs to think about a national sales tax, to hit the poor with. Both sides need to chop spending. In Obama's case, that means saying by by to his big social programs, and in McCain's case, it means that the army shouldn't get Future Combat System and the Navy might need just build more normal ships, and the air force might need to choose one kind of fighter rather than two.

Everything I know about taxes and city management, I learned from Sim City.

For instance, once a city reaches a certain population, with enough private sector businesses, industrial and commercial, you can safely drop taxes. The burden on everyone is lessened because, despite the increased cost of running such a large city, you can still collect more than enough money between the large population and business base while continuously reducing the rate overall.

The economy did not fall on its ass because of progressive taxation. What happened was that the hot shots on Wall Street were engaging in a ridiculous business enterprise and the deregulation that conservatives fawn over stopped anyone from catching it on time. Progressive taxation had nothing to do with anything.

Moreover, your rant against taxes is retarded. Conservative neo-cons in the Bush Administration went for a little trip in Iraq that cost three trillion dollars. Now we have a budget deficit of $500

New York, in particular, is disgusting. They have a tax policy that reflects decades of liberal orthodoxy and the stupidity of the results just staggers the mind. I mean, they raise taxes on cigarettes, and are suddenly horrified to find that people do not buy cigarettes in New York. Now, what do you think the enlightened liberals do up there? Do you think they set the tax at a more reasonable level? No... they call out the cops and pass even -more- laws designed to try and ban people from cigarettes from o

If you are any kind of economicist you would realize that no functioning economy in the world today taxes at a rate that exceeds the Laffer curve inflection point. Regeanomics is a ridiculous idea.

According to Nobel prize laureate James Tobin, "[t]he 'Laffer Curve' idea that tax cuts would actually increase revenues turned out to deserve the ridicule with which sober economists had greeted it in 1981."

If you are any kind of economicist you would realize that no functioning economy in the world today taxes at a rate that exceeds the Laffer curve inflection point. Regeanomics is a ridiculous idea

First off, the argument of Reaganomics is that the industrialized world is actually to the -right- of the inflection point, in other words, taxes are too high.

Meanwhile, the rest of the industrialized world has lowered corporate tax rates and investment tax rates below that of the USA. So, yeah, on one hand, you have the Europeans saying that Reaganomics is terrible, and people like you say, "oh yeah, you are so right"... but then, the Europeans lower their taxes, and suddenly the Euro goes sky high because of the flood of investment into the old continent.

Yeah, the EU is saying Reaganomic sucks, but that's not what they did, and they are laughing all the way to the bank.

Reaganomics has been adopted world wide and as such has produced the largest wave of economic expansion, on the planet, in human history. There's two problems with the USA right now. One is short term and the other long. The short term problem is admittedly part of some fiscal stupidity by President Bush, but the long term problem is by fiscal stupidity of liberals.

The long term and fundamental economic problem faced by most governments is that they ha

Reaganomics has been adopted world wide and as such has produced the largest wave of economic expansion, on the planet, in human history. There's two problems with the USA right now.
No it hasn't. Two decades of cheap oil has produced economic expansion in the 1980s and 1990s. In the 2000s, there has been very little economic expansion. I'm so sick of "conservatives" claiming that "liberal" policies are to blame for this or that evil when it's perfectly fucking clear that conservatives in this country w

Liberals stand for limited government and personal freedom. What's that got to do with the health care mess? I love how you talk about federal entitlements like they're some sort of nasty disease while ignoring that most of the beneficiaries are the rich and large corporations; also consider that your one man paying for 9 others got that way by screwing over a lot of people for his own gain - if wages hadn't been dropping since the 70s (for most of us), this wouldn't be an issue.

Clinton wasn't too bad, fiscal wise, but don't forget that he had a Republican congress that voted no to nearly every single one of his proposals.

Reaganomics never worked, and never will, because all it does is put more money in the hands of the rich and fucks the poor.

What poor has Reaganomics fucked, prey tell? The poor that now have at least one family car? The poor that have TV's, designer shoes, new clothes, food so much that they are fat, a higher home ownership rate than ever before, playstations, xboxes, ipods, cell phones... do you mean those poor?

America's poor are in some ways arguably richer than the middle class of America was 30 years

"A few months ago, New York State made changes to its tax law which potentially require out-of-state internet retailers to collect and remit sales taxes to New York State.

Since then, New York State has issused a memorandum indicating that an internet retailer would be presumed not to need to collect New York sales tax as long as: (1) its contracts with its New York-based affiliates prohibit the affiliates from engaging in solicitation activities which refer New York customers to the retailer, and (2) the New York-based affiliates sign an annual statement confirming that they have not solicited New York customers for the retailer...."

I live in upstate NY as well and I see the tremendous issues NY has with attracting good paying jobs. NY is unable to attract new business' therefore they look to supplement their revenue by taxing the business' they can't attract here even if said business has no physical presence in the state. NY government has this view that they are entitled to a piece of the action. They are not. If they can't attract the business here they lose and should lose. The NY government is what is getting in the way of business' coming into NY and entrepreneurs starting new business'. I'm afraid you will see more of what Overstock did and thus hurt the NY economy even more. We in NY have politicians completely out of touch with the reality of the business world.

I find it amazing that when a government raises taxes they think the rich will pay it. The rich will just raise the cost of the goods they are selling accordingly in most cases.

I do know that if you buy a car in a state with a sales tax of, say 3%. And move to NY a year or so later. They're going to want the difference (4%) when you go to register your car. So when you think your registration's going to cost $100* and it ends up costing $1000, it's a bit of a shock.

*Not sure what a registration costs these days. I've been living in Europe for the past 6 years. w00t!

if you buy a car in a state with a sales tax of, say 3%. And move to NY a year or so later. They're going to want the difference (4%) when you go to register your car.

At least NY only goes for the difference. DE taxes the full blue book value of the car when you move to DE and register it there, with no regard whatsoever for previous taxes paid on the vehicle in other states.